BSP shares turning out to be a good buy for the average investor

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I’ve always been interested in entering the stock market but for some reason I always held back from actually investing in this type of investment.  I found out that it wasn’t necessarily expensive to enter the share market but like many of you, buying a home tended to be more of a priority despite the expensive price tag attached to it.  But once I finally purchased a home, I made it a goal to enter the share market and this goal was realized in late 2015. As the title says, I purchased Bank South Pacific shares and the recent announcement of the dividend payout by the Bank’s Board is indeed pleasing.  I wanted to give an insight onto how I came to buying these shares because on the face of it, the share market seems to be a complex creature to many of us ordinary citizens and it seems to be a creature restricted to financial wizards.  The truth is, anyone can buy shares and hope my experience can share some light into this area.

I can’t recall how I really got interested in the share market but perhaps it was just a case of trying to look at possible investment types to generate wealth.  I’d heard about all the money rain and other fast money schemes and it didn’t really interest me because of the news that many lost their money. For some, a lot of it.  True, some succeeded but even those who succeeded didn’t last long with their “winnings”.  To put it simply, I was looking for an investment vehicle that would help me grow my wealth – a vehicle where I was comfortable with the risks given the money I would put in.

As I mentioned earlier, I had already purchased my property and I was looking at an investment type where I would invest “some” of my extra savings and see how it went.  But even before I actually spent anything on the share market, I took some time to understand how the share market worked and thankfully the Port Moresby Stock Exchange were holding some workshops on the basics of the share market and share investment.  I went to a couple of the workshops and I must say that these workshops have been beneficial and certainly provided a better understanding on how the whole thing works.  I spent some time reading online about the share market too because the workshop was fairly general but certainly a good starting point.  Once I had more than a fair idea of what the share market was, it’s benefits and risks, I decided to take the plunge.

There’s a saying in investment circles that you don’t put your eggs into one basket and that’s true.  Basically, if you put your money into one investment type or on a single share type, you could lose everything.  Obviously, the reverse could happen too.  I “sort of” did that but placed more money on the BSP shares.

So why did I choose more of the BSP shares?

For savvy investors, they will go through all the financial details, the ratios, the analytics etc before arriving at a decision.  For me, I wasn’t a financial wizard so many of the financial details I came across was a little too complicated for me. What I did know and found through my own reading was to find a business that you knew more about and would understand it.  My choice basically came down to this because out of all the shares I tended to understand the bank more. I mean we deal with the bank weekly right.  But we don’t deal with say the mining companies or other resource companies.  I also understood the media releases issued by the banks more than the resource companies so based on this and a general over view of the bank’s financial statements I opted for BSP.  One thing you have to understand is that the more information you consider the better.  But sometimes this “more information” can make you confusing.

And here’s the thing – when you consume the information, your next step must be to take action.  There’s no point spending so much time on the information and doing little or nothing.  I looked up the share market price for BSP and other companies I had marked to buy shares in and finally took the step into buying.

A sharebroker helps you with the buying and selling of shares and fortunately two brokers I had worked with, Kina Securities and BSP Capital have been so helpful and efficient.  All I had to do was fill the relevant forms, tell them which shares I wanted to buy at the maximum price I was comfortable with and just left it with them.

Unlike the quick money schemes, buying into shares is more a medium to long term investment so it’s important to understand that you’re unlikely to make quick money overnight.  It’s also important to understand that like any investment, there are risks involved.  I didn’t want to spend too much money on shares to start off with given my limited understanding but would monitor and further educate myself on it and money depending invest further.

The BSP shares I bought were just under K7.50 in late 2015 but have since grown to around K9.50 in the first quarter of 2017 and I must admit that the results are pleasing.  Based on the share price, my investments have grown just over 25% which is an impressive amount – at least to my own understanding.  While I’ve seen the value of these shares grow, it’s been a bonus to receive a dividend every financial year.  The recent announcement by the Bank’s Chairman Kostas Constantinou is wonderful news to average investors like me and in  a way it’s like a reward for the time spent in educating yourself to understand the share market and choosing a share like BSP to help you grow your wealth.

You need to understand that you can lose money in the share market too.  But educating yourself and keeping yourself informed about the markets in which your chosen business conducts business is important because ultimately you want to make decisions based on the risks you’re comfortable to take.


Mr TSL’s Tips to enter share market

  • educate yourself as much as possible
  • choose a business that you understand
  • it’s important to do something about the knowledge you acquire through your education. That is, take action and don’t just put your knowledge to waste.
  • understand that this is no fast money scheme
  • be patient but keep your eyes on the market
  • don’t buy shares that costs more than it’s worth
  • seek professional advice or at least talk to someone who has experience investing in the share market